KEEPING THE PACE - societegenerale.com · three strategic priorities for the group nbi: +3% cagr our objectives for 2016 our strategic priorities for the medium-term keeping the pace

KEEPING THE PACEKEEPING THE PACE

FRÉDÉRIC OUDÉA

• Slow recovery in the Euro-zone, more dynamic and volatile in emerging markets

• Exit from accommodative monetary policies creating uncertainties and volatility

• Increasing globalisation of trade and capital flows

• Growing demand for energy, natural resources and infrastructure financing

THE GREAT TRANSITION

ECONOMICTRENDS

REGULATORYENVIRONMENT

• Progress towards European banking union, paving the way for a stabilisedand harmonised financial framework

• Basel 3 / CRD4 framework pushing towards increased disintermediation

GROUP STRATEGYINVESTOR DAY | 13 May 2014 P.2

ENVIRONMENT

CLIENT BEHAVIOUR,

TECHNOLOGY

• Basel 3 / CRD4 framework pushing towards increased disintermediation

• Fixed income market activities being moved to central clearing platforms

• Transition to a “digital society”: E-commerce, data analytics and mobility solutions reshaping customer relationship and operating models

2014-2016: A NEW PHASE OF DEVELOPMENT FOR SOCIETE GENERALE

� We are a leading European Universal Bank with an international reach and solid roots

• 150 years of existence dedicated to accompanying corporate and retail clients internationally

• Demonstrated ability to grow, resist, adjust successfully over time

� We have completed our adaptation to the Basel 3 environment• Reinforced balance sheet, improved risk profile, greater focus

• Founded in 1864 to “support the development of trade and industry”

• Currently serving 32 million clients

GROUP STRATEGYINVESTOR DAY | 13 May 2014

• Reinforced balance sheet, improved risk profile, greater focus

� We have proven the relevance of our balanced Universal Banking model and its adaptation to client needs

• Currently serving 32 million clients

• 148,000 employees

• Present in 76 countries

• NBI EUR 23bn

• Total credit outstandings: EUR 406bn

As of end-2013OUR FOCUSKeep the pace of transformation of our businesses to deliver growth and profitability

P.3

WHAT MAKES SOCIETE GENERALE DIFFERENT

� We are a relationship bank, with a strong focus on satisfying our clientsOUR CLIENT RELATIONSHIP MODEL

� We have a long-standing and demonstrated track reco rd in financing and advising corporate and institutional clients

OUR HISTORICAL EXPERTISE IN CIB


� We have a higher growth potential than most Europea n peers in each of our core pillars and higher revenue synergies

OUR ORGANIC GROWTH POTENTIAL

� We have a strong company culture based on team spir it, innovation, commitment and responsibility

� We have learnt the lessons from the crisis in terms of risk management and business conduct

OUR MANAGEMENTVALUES

P.4

WE HAVE BUILT A UNIVERSAL BANKING MODEL BENEFICIAL TO OUR CLIENTS…

CORPORATE INDIVIDUALINSTITUTIONAL

Retail banking networks in Central & Eastern Europe (incl. Russia), Middle East, and Africa

Two networks: Societe Generale, Credit du Nord + onl ine bank Boursorama Payment solutions

Transaction banking

FRENCH RETAIL BANKING

INTERNATIONAL RETAIL

WE HAVE BUILT A UNIVERSAL BANKING MODEL BENEFICIAL TO OUR CLIENTS


Insurance

Asset & Wealth Management

Financial Services to corporates

Financing & Advisory

and Africa

Market Activities

Investor Services

INTERNATIONAL RETAIL BANKING & FINANCIAL

SERVICES

GLOBAL BANKING & INVESTOR SOLUTIONS

P.5

#3 Czech Republic

#2 Romania

#1 Russia foreign owned retail bank#3 Retail bank in France

#1 World Equity Derivatives

#3 World Natural Resources Finance

#1 Euro Corporate issuances

� Strong market positions across businesses

� Refocused on core franchises following portfolio op timisation since 2010

� Organisational simplification and streamlining achi eved in 2013

FRENCH RETAIL BANKINGINTERNATIONAL RETAIL BANKING

& FINANCIAL SERVICESGLOBAL BANKING

& INVESTOR SOLUTIONS

…BASED ON THREE COMPLEMENTARY PILLARS WITH LEADING FRANCHISES…


11 MILLION CLIENTS

EUR 176bn CREDIT OUTSTANDINGS

22 MILLION CLIENTS


>5,000 FI & CORPORATE CLIENTS


#1 Russia foreign owned retail bank

#1 Cameroon, Senegal, Cote d’Ivoire

#4 bank in Morocco

#2 Europe #3 International Car renting

#1 Europe Equipment Finance

#4 Bancassurance in France

#1 Online bank in France

#2 Commercial bank for large corporates in France

#1 Euro Corporate issuances

#2 EMEA project finance bookrunner

#1 Certificates & Warrants

#3 World Listed derivatives clearing

#1 France #2 Europe in Fund Accounting & Administration Services

#1 Private bank in France

P.6

� Recurring earnings from mature countries

� Exposure to fast-growing emerging markets

A balance to be maintained going forward

� ‘B to C’ activities to remain focused on the EMEA region

…WITH A GOOD GEOGRAPHICAL BALANCE

46%6%

6%

7%5%

1%

ASIA PACIFIC

RUSSIA

EASTERN EUROPE

AFRICA LATIN AMERICA

EMERGING: ca. 25%

2013 NBI BREAKDOWN (EUR 23bn)


• Strong competitive positioning

• In-depth knowledge, proven track record

• Capacity to deliver synergies

� ‘B to B’ and ‘B to B to C’ activities operating on a wider geographical scope

• Connect Europe to other economic zones

• Deliver world-class expertise on selected activities: CIB, Financial Services to corporates, Lyxor

46%

25%

5%

6%

WESTERN EUROPEIncl. CZECH REPUBLIC

NORTH AMERICA

FRANCE

MATURE: ca. 75%

P.7

FURTHER IMPROVE CLIENT SERVICE, MAINTAIN LEADERSHIP

IN INNOVATION

REINFORCED BALANCE SHEET

GROUP ADAPTATION COMPLETED

THREE STRATEGIC PRIORITIES FOR THE GROUP

NBI: +3% CAGR

OUR OBJECTIVESFOR 2016

OUR STRATEGIC PRIORITIES FOR THE MEDIUM-TERM

�

KEEPING THE PACE


CAPTURE GROWTH THROUGH BUSINESS DEVELOPMENT AND

INCREASED SYNERGIES

DELIVER SUSTAINABLE PROFITABILITY

IMPROVED RISK PROFILE

NBI: +3% CAGR

ROE: ≥10% WITHCET1 ≥10%

REFOCUSED PORTFOLIO

�

�

P.8

FURTHER IMPROVE CLIENT SERVICE, MAINTAIN LEADERSHIP IN INNOVATION

CORPORATES AND FINANCIAL INSTITUTIONS WANT WE OFFER OUR CLIENTS

OBJECTIVE: TO BE A BANK OF REFERENCE IN TERMS OF CL IENT SATISFACTION

CLIENT SATISFACTION AT THE HEART OF OUR STRATEGY

OUR INNOVATION CULTURE AND EXPERTISE ADD VALUE

FOR CLIENTS

�


� Expertise & intimacy

� International reach

� Tailored solutions

INDIVIDUAL CLIENTS WANT� Advice through the life-cycle

� Value for money

� Convenient, real-time & mobile solutions

� High-quality client coverage

� Presence in 76 countries

� First-class expertise

� Local access to expertise

� Competitive pricing

� Top-notch digital services

P.9

We want our innovation to be

• Nurtured by each business and close to client needs (e.g. APPLI in France, ALD)

• Sponsored at the top (Executive Committee

FURTHER IMPROVE CLIENT SERVICE, MAINTAIN LEADERSHIP IN INNOVATION

�INCREASE DIGITAL READINESS:

PROFOUND INTERNAL TRANSFORMATION OF CULTURE AND IT SYSTEMS

A major internal push since 2010

� To foster a digital mindset among teams and executives

• SG internal social network (40,000 users in just 2 years)• Annual international innovation Group trophy


• Sponsored at the top (Executive Committee member Françoise Mercadal)

• Open to collaboration with staff (PEPS), clients (collaborative approach), universities, research centres

• Engaging: “Societe Generale answers in 30 minutes on Twitter”

• Economically savvy: Paylib, developed in collaboration with LBP and BNPP

A major additional step forward

� Strategic partnership with Microsoft to digitally upgrade our company and promote mobility

• State-of-the-art digital applications, rolled out on a worldwide level

• Maintain strong focus on IT & data security

CAPTURE GROWTH THROUGH BUSINESS DEVELOPMENTS…

�2013-2016 NBI CAGR

10%AfricaAsia

Eastern EuropeGermanyRussia

Global Transaction BankingFinancing & Advisory

ALL BUSINESSES TO CONTRIBUTE TO GROWTH


5%

3%Mature retail

Global Markets

Equipment FinanceALD

Private Banking

Financing & AdvisoryOnline Banking

Insurance

P.11

…AND INCREASED REVENUE SYNERGIES

� Representing 25% of total Group revenues: one of the highest levels acrossthe industry. Up +14% vs. 2011: growing faster than total Group revenues

Value-enhancing for our customers

• One-stop shop offering, better understanding of client needs, more tailor-made solutions

Value-creative for our shareholders

• Lower cost of client acquisition

FIRM-WIDE CROSS-SELLING REVENUES: EUR 5.5bn* IN 201 3

�


• Lower cost of client acquisition

• Enhancement of customer loyalty through higher share of wallets

• Economies of scale

* Source: management data, GBIS EUR 1.5bn, IBFS EU R 2.2bn and FRB EUR 1.8 bn

P.12

� New levers identified to foster future revenue growth from s ynergies• Increase cooperation between French Private Banking and Retail networks

• Implement Investor Services chain cooperation initiatives

• Deepen and widen footprint of our bancassurance offering

• Expand our Global Transaction Banking platform to serve all our corporate clients

�DELIVER SUSTAINABLE PROFITABILITY: DISCIPLINED COST AND RISK MANAGEMENT

Cost discipline

� Run the bank on an industrial model

• Increase in operating expenses of +1% p.a. through 2016

• Close monitoring of discretionary expenditure at all levels

• Tight control of investments


Risk management

� A comprehensive risk appetite framework

� Strong governance: finance, risk, audit and compliance fun ctions vertically integrated

� Enhanced employee risk culture

� Maintain balanced capital allocation

• Retail banking activities: basis of our Universal Banking model

• Share of market activities to remain limited to 20%

� Profitable RWA growth policy

• Target average business RWA growth of +4% p.a. for 2013-2016

• Favour fast-growing and most profitable client franchises,

in synergy with existing activities

Ongoing disciplined portfolio management

BUSINESS RWA* 2016E (BASEL 3)

�DELIVER SUSTAINABLE PROFITABILITY: DISCIPLINE IN ALLOCATING CAPITAL

61%

20%

19%


� Ongoing disciplined portfolio management

• Decisive management of underperforming franchises

• Ready for limited, opportunistic M&A based on simple criteria:Relevance to our customers, contribution to profitability and growth, connectivity with other businesses, cost synergies, risk profile

� Dividend policy

• 2014 dividend payout ratio: 40%

• Target 2015-2016: 50%

• 100% cash dividend

* Excluding legacy assets. Figures include Newedge a t 100%.

P.14

20%

Retail

Market Activities

Financing, Investor Services & Wealth Management

Financing, Investor Services & Wealth Management

Market Activities

Retail

� Top 5 European player with multi-specialist model, best-in-class profitability

• A focused range of complementary activities with leading positions, synergies at the heart of the model

• A solid client base

• Risk profile sharply reduced since 2007, thanks to transformation of business portfolio, sale of legacy asset portfolio and solid risk management

• A stable, cohesive and experienced management team

� Business mix is well -suited to changing client demands and new regulator y environment

OUR BUSINESSES – GLOBAL BANKING & INVESTOR SOLUTIONS

KEY STRENGTHS


� Business mix is well -suited to changing client demands and new regulator y environment

• Benefits from global growth trends in structured financing

• Well positioned to gain market share in a refocused CIB industry landscape

• Capacity to take advantage of ongoing disintermediation and capital market and post-trade services revolution:

euro capital market, post-trade integrated offering

P.15

A superior CIB franchise at the core of our model, well-placed to capture higher growth and deliver higher profitability than the industry

OUR BUSINESSES GLOBAL BANKING

AND INVESTOR SOLUTIONS

1

TOP PRIORITIES

Build up further our existing strengths• Grow client footprint• Extend leadership in equity derivatives and selected fixed income areas

• Commit capital to grow Financing & Advisory• Develop Private Banking in Europe and Lyxor


TARGETSFOR 2016

� NBI: +3% CAGR

� ROE: 15%

Be at the forefront of the capital market and post-trade services revolution

2

3 Keep resource-efficiency at the heart of our business

P.16

� Leading franchises with recognised expertise: banks & insurance

� A capacity to grow in the long term

OUR BUSINESSES - INTERNATIONAL RETAIL BANKING & FINANCIAL SERVICES

Confirmation of our long-term commitment to Russia, despite current crisis

• Promising banking market

KEY STRENGTHS


� Reshaped business models attuned to the post-crisis environment: more self-funded, more cost efficient and with enhanced risk management

P.17

• Promising banking market• Good potential for growth for our business

on a self-funded basis and with strict risk control

Back to profitable growth

OUR BUSINESSESINTERNATIONAL RETAIL BANKING &

FINANCIAL SERVICES

1

TOP PRIORITIES

Capture growth potential and boost synergies• Individuals: bancassurance, Private Banking, online services• Corporates: grow ALD and Equipment Finance; cross-sell transaction banking, flow business, capital markets, structured finance


TARGETSFOR 2016

� NBI: +5% CAGR

� ROE: 15%

2 Pursue ongoing set-up optimisation• Rebound strategy in Romania• In Russia, implement sound growth strategy and deliver ROE of 14% in 2016

3 Raise profitability

P.18

� Three complementary brands in the best retail marke t among

the large Euro-zone economies

• Exposed to fastest-growing and richest regions in France

• Geared towards affluent individuals and corporate clients

� Differentiated value proposition

• Efficient model proven by consistent and increasing score of client satisfaction

OUR BUSINESSES - FRENCH RETAIL BANKING

KEY STRENGTHS


• Efficient model proven by consistent and increasing score of client satisfaction

• Leadership in digital services

� Strong track record

• Resilient business with higher growth than peers over the last ten years

• Proven innovation capabilities

• Benefiting from Group synergies (Insurance, CIB, Private Banking…)

P.19

A competitive set-up ready to deliver higher growth than peersand sustainable profitability

OUR BUSINESSES FRENCH RETAIL BANKING

1

TOP PRIORITIES

Develop growth drivers in a low interest rate environment• Individuals: bancassurance, Boursorama, Private Banking• Corporates: overall positioning as main banker, transaction banking

2 Pursue the transformation of the customer


TARGETSFOR 2016

� NBI: +1% CAGR

� ROE: 14%

2 Pursue the transformation of the customer relationship model

3 Increase operating efficiency

4 Leverage on our strengthened risk management

P.20

2016 FINANCIAL TARGETS

2013 2016 targets

GROWTH REVENUES EUR 24bn (1) +3% CAGR

EFFICIENCY COST/INCOME RATIO 66%(1) 62%

PROFITABILITY RETURN ON EQUITY 8.3%(1)≥10%


SOLVENCYBASEL 3 FULLY LOADED CET1 10% ≥10%

PAYOUT RATIO 27% 50%

2016 EPS: EUR 6

(1) 2013 figures based on proforma quarterly series p ublished on March 31 st 2014, adjusted for changes in Group perimeter (nota bly the acquisition of Newedge and the sale of Private Banking activities in Asia), excluding lega cy assets, non-economic and non-recurring items as detailed on p39 of full-year and 4 th quarter 2013 results presentation

P.22

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KEEPING THE PACE - societegenerale.com · three strategic priorities for the group nbi: +3% cagr our objectives for 2016 our strategic priorities for the medium-term keeping the pace